A.D.A.M., Inc. Reports Second Quarter 2006 Results; Company Reports Quarterly Net Income of $0.10 Per Share, Licensing Revenues up 15%.ATLANTA Atlanta (ətlăn`tə, ăt–), city (1990 pop. 394,017), state capital and seat of Fulton co., NW Ga., on the Chattahoochee R. and Peachtree Creek, near the Appalachian foothills; inc. 1847. -- A.D.A.M., Inc. (Nasdaq: ADAM Adam, the first man, in the Bible Adam (ăd`əm), [Heb.,=man], in the Bible, the first man. In the Book of Genesis, God creates humankind in his image as a species of male and female, giving them dominion over other life. ) today announced financial results for its second quarter ended June June: see month. 30, 2006. Highlights --Revenues for the second quarter ended June 30, 2006 were $2,715,000, up 9% from $2,489,000 in the second quarter of 2005. --Recurring license revenues, which accounted for 78% of the company's total revenue, grew 15% during the quarter ended June 30, 2006. This growth was the result of strong renewal rates, which continue to be approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 90%, and new customer contracts. Especially strong growth was recognized in the payer market with a growth rate in excess of 30%. Growth in this market was a result of increased sales by our distribution partners. During the second quarter, the company signed 16 new licensing contracts. --Net income for the second quarter ended June 30, 2006 was $951,000, or $0.10 per share on a fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. basis compared to net income of $647,000, or $0.07 on a fully diluted basis for the second quarter of 2005. --Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become (which we define as earnings before interest, taxes, depreciation, amortization and non-cash stock compensation expense) improved to $903,000 for the second quarter of 2006 as compared to $855,000 for the second quarter of 2005. Adjusted EBITDA margin for the second quarter of 2006 was 33%. Adjusted EBITDA is a non-GAAP measure. See "Non-GAAP Measure" below for a discussion of our use of Adjusted EBITDA. First-Half 2006 Results For the six-month period ended June 30, 2006, revenues were $5,197,000, up 8% from $4,827,000 in the year-ago period. Net income for the six-month period ended June 30, 2006 was $1,679,000, or $0.17 per share on a fully diluted basis, as compared to $1,155,000, or $0.12 on a fully diluted basis, for the same period of 2005, an increase of 45%. As of June 30, 2006, A.D.A.M.'s cash and investments totaled $11,924,000, an increase of $1,247,000 from December December: see month. 31, 2005. Second Quarter 2006 Revenue Highlights For the second quarter ended June 30, 2006, licensing revenues increased $275,000, or 15%, to $2,114,000 compared to $1,839,000 in the year-ago period. Revenues during the second quarter of 2006 from the education market improved to $506,000, or 7%, from $474,000 in the same period of 2005. The increase in educational sales for the second quarter of 2006 was the result of several large orders for A.D.A.M. Interactive Anatomy anatomy (ənăt`əmē), branch of biology concerned with the study of body structure of various organisms, including humans. Comparative anatomy is concerned with the structural differences of plant and animal forms. 4.0, A.D.A.M.'s flagship product A primary product of a company, which is typically why the company was founded and/or what made it well known. For example, MS-DOS, Windows and the Microsoft Office suite have been flagship products of Microsoft. CorelDRAW is a flagship product of Corel Corporation. for education. Gross margins, which we define as revenues less the cost of revenues (which includes amortization of capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. software development costs) divided by revenues was 81%, consistent with gross margins in the year-ago period. "A.D.A.M. continues to grow its base of licensing customers within a diverse cross section of both traditional healthcare organizations and consumer focused portals," commented Kevin KEVIN Keepers of the Eternal Vigilance of the Islamic Nation (fictional, from White Teeth by Zadie Smith) Noland Noland may refer to:
Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. opportunities for revenue growth." Non-GAAP Measure Adjusted EBITDA represents earnings before interest, taxes, depreciation, amortization and non-cash stock compensation expense. This financial measure is not a measure of financial performance in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting . We believe that this non-GAAP financial measure is useful because it is an appropriate measure for evaluating our operating performance. We present this non-GAAP financial measure to provide additional information regarding our performance and because it is a measure by which we gauge gauge In manufacturing and engineering, a device used to determine whether a dimension is larger or smaller than a reference standard. A snap gauge, for example, is formed like the letter C, with outer “go” and inner “not go” jaws, and is used to our profitability. You should not consider this non-GAAP financial measure as an alternative to net income. Our calculation of this financial measure may be different from the calculation used by other companies and, as a result, comparability may be limited. A reconciliation of this non-GAAP financial measure to the most directly comparable GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). financial measure is set forth in the table below. Conference Call Information Kevin Noland, A.D.A.M.'s chief executive officer, and Mark Adams Mark Adams is a college basketball analyst on the ESPN family of networks. Adams was a college basketball coach for 17 years. He was known as a program rebuilder who took over programs that were a combined 28-54 (. , A.D.A.M.'s chief financial officer will be conducting a conference to discuss second quarter results August 15, 2006, at 10:00 A.M. ET. To participate in the call, please dial (877) 829-1394 approximately five minutes prior to the start time. International callers may dial (706) 679-8134. A digital replay will be available at 12 noon ET on August 15, 2006 by dialing (800) 633-8284 or (402) 977-9140 with reservation A clause in a deed of real property whereby the grantor, one who transfers property, creates and retains for the grantor some right or interest in the estate granted, such as rent or an Easement ,a right of use over the land of another. number 21299743. About A.D.A.M., Inc. For more than a decade, A.D.A.M.'s unique, visually engaging health content, decision support tools and educational products have been helping millions of people "get smart" about their health and wellness. With one of the largest consumer-oriented medical information libraries in the world, A.D.A.M. markets its solutions to leading healthcare and pharmaceutical organizations, government, employers, and educational institutions. These innovative products empower empower verb To encourage or provide a person with the means or information to become involved in solving his/her own problems consumers with the information they need to effectively participate in consumer directed health plans, make positive changes in behavior and improve overall health. To learn more about A.D.A.M., visit www.adam.com or call 1-800-408-ADAM. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Except for historical information, all of the statements, expectations and assumptions contained in this press release are forward-looking statements. These statements, especially revenue, net income and cash flow forecasts, involve a number of risks and uncertainties that could cause actual results, performance or developments to differ materially. Factors that could affect the company's actual results, performance or developments include general economic conditions, development of the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the as a source of health information, pricing actions taken by competitors COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. , demand for the company's health information, and regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. changes in laws and regulations that impact how the company conducts its business. A.D.A.M. disclaims any obligation or duty to update any of its forward-looking statements.
Three Months Six Months
Ended Ended
June 30 June 30
Statement of Operations 2006 2005 2006 2005
----------------------- -------- -------- ------- -------
Revenues, net $ 2,715 $ 2,489 $5,197 $4,827
Cost of revenues 509 474 997 972
-------- -------- ------- -------
Gross margin 2,206 2,015 4,200 3,855
-------- -------- ------- -------
Operating expenses
General and administrative 565 601 1,125 1,195
Product and content development 350 343 710 662
Sales and marketing 454 453 889 854
Depreciation and amortization 37 37 75 91
-------- -------- ------- -------
Total operating expenses 1,406 1,434 2,799 2,802
-------- -------- ------- -------
Operating income 800 581 1,401 1,053
Interest income, net 151 66 278 102
-------- -------- ------- -------
Net Income $ 951 $ 647 $1,679 $1,155
======== ======== ======= =======
Basic net income per common share $ 0.11 $ 0.08 $ 0.20 $ 0.14
======== ======== ======= =======
Basic weighted average number of
common shares outstanding 8,430 8,041 8,374 8,151
======== ======== ======= =======
Diluted net income per common share $ 0.10 $ 0.07 $ 0.17 $ 0.12
======== ======== ======= =======
Diluted weighted average number of
common shares outstanding 9,755 9,377 9,822 9,495
======== ======== ======= =======
June December
30, 31,
Summary Balance Sheet Data 2006 2005
--------------------------- -------- --------
Cash and short-term investments $11,924 $10,677
Accounts receivable-net 2,646 1,840
Current portion of deferred tax
asset 221 221
Total current assets 15,233 13,294
Deferred tax asset, net of current
portion 5,279 5,279
Goodwill 2,043 2,043
Total assets 23,774 21,880
Deferred revenue 3,723 3,643
Short term debt 21 20
Total current liabilities 4,598 4,718
Total liabilities 4,605 4,736
Shareholders' equity 19,169 17,144
Working capital 10,635 8,576
Three Months Six Months
Ended Ended
Reconcilation of Non-GAAP June 30 June 30
Measure 2006 2005 2006 2005
------- ------- ------ ------
EBITDA and Adjusted EBITDA
Net Income $ 951 $ 647 $1,679 $1,155
Adjustments:
Interest income, net (151) (66) (278) (102)
Amortization of capitalized
software development costs
(cost of revenues) 190 174 377 359
Depreciation & amortization
(operating expenses) 37 37 75 91
------- -------- ------ ------
EBITDA 1,027 792 1,853 1,503
------- -------- ------ ------
Stock compensation expense
(benefit) (124) 63 (135) 156
------- ------- ------ ------
Adjusted EBITDA $ 903 $ 855 $1,718 $1,659
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